Binance struggles to find banking partners in US
The US affiliate of crypto exchange Binance has struggled to find banking partners following the collapse of three banks that were known for working closely with the cryptocurrency industry.
People familiar with the matter told the Wall Street Journal that Binance.US has been left without banking services following the recent failures of US crypto-friendly banks, which forced the exchange to rely on middleman banks to store its funds.
The loss of direct banking relationships has made it more difficult for Binance.US to operate smoothly as it must now navigate a complex web of intermediaries to access the banking services it needs.
Per the report, Binance.US has made several attempts to establish a direct banking relationship with banks such as Cross Riverbank and Customers Bancorp but were all in vain. The situation forced the exchange to hold its customers’ funds through the banking partners of the financial technology firm Prime Trust.
This arrangement highlights the difficulties that crypto firms face in accessing traditional banking services and the need for greater regulatory clarity in the sector. US banks, which were already cautious about working with crypto companies, are now even more reluctant to provide services to the industry following a series of regional lender failures and increased regulatory scrutiny.
The fall of the three American banks, including Silicon Valley Bank (SVB) and Signature Bank, is leaving crypto firms and their customers uncertain about the safety of their funds. The three banks have been dissolved due to financial difficulties, which raised concerns over potential implications of the crisis for the crypto market.
While there is no outright ban on serving crypto clients, financial institutions are imposing lengthy application procedures, turning away even major platforms, and in some cases, completely shutting the door on crypto businesses.
Since then, cryptocurrency firms in the US have been faced with a shortage of banking options. This has forced many cryptocurrency firms to turn to alternative banking solutions, such as digital banks and smaller, local banks that are more willing to work with the industry.
However, these alternative solutions are often more expensive and less reliable than traditional banking services, which can pose significant challenges for cryptocurrency firms that are looking to grow and expand their operations. Without reliable banking partners, cryptocurrency firms may struggle to pay bills, manage payroll, or even pay taxes, which can hinder their ability to compete in the industry.
To address this issue, some cryptocurrency firms have attempted to create their own banking systems, such as stablecoins. However, these solutions are still in their early stages of development and have not yet been widely adopted by industry.
